The Problem Most currency in use today is fiat currency: it is worth something because we give the value to it. US currency, US dollar, is Federal Reserve Notes that is controlled by the Federal Reserve Banks. After “Nixon Shock”, the President Richard Nixon unilaterally cancelled the direct convertibility of the US dollar to gold, took place in 1971, the US dollar is backed only by the government credit. [1] Simply, the dollar is backed by the full faith and credit of the US government. [2] This trust-system is a potential problem. The dollar is only worth what we agree that it is worth as a society. A problem is that the society (Reserve Bankers) mostly consists of financial leaders who are highly influenced by corporations and Wall Street. These people often propose and change the worth of the dollar without considering their social responsibilities. In addition, the current currency faces environmental problem. The resources making the penny are zinc and copper. The value of these resources has quadrupled over last decades. The cost of making a penny is nearly two cents. A nickel faces the same problem where it cost about nine cents to produce it. [3] Paper has been an inexpensive material but if we keep printing out dollar bills, the same problem can happen for the banknotes soon or later. Bottom line is that US dollar is a piece of paper that has little inherent value. It is not valuable when our government fails to back it up. You can’t eat it and it can’t be used to build a valuable commercial product.
Have you ever thought that currency is the sustainable problem? Find out why currency is the problem. In fact, there are already many people who are practicing sustainable life style without use of US dollar.
The Stakeholders
In large, the people and government are affected by the currency system the most. The currency was created to help people. In the beginning, people directly exchange goods or services for other goods and/or services. To make this exchange process easier the civilization started to use a common unit of exchange like currency. Today currency is fiat currency where the value is flexible. This instability is affecting people’s lives and properties significantly. According to Joel Kurtzman, an author of The Death of Money, today currency has become too complex system where stocks, bonds, insurance policies, and financial contracts emerged so that a historic notion of money has faded away. [4] Most people fear this complex system and are often overwhelmed by financial terms and experts. The value of house, bank deposit, insurance, and more personal properties are not stable and subject to change. The government is doing its best job to maintain the value of US dollar and secure people’s property value. However, it requires a lot of effort. In global economy system, the government needs to coordinate both national and international factors to protect the value of US dollar. The government also needs to maintain its credibility. The government has a huge responsibility and its capacity is often challenged.
Consequences of Not Addressing
Inflation
When people fail to address the currency issues to the government or oversee government’s policies on currency, there are many consequences. The country can face the inflation where the value of the currency decreases. Through an effective civic engagement, people must check and question the government. In old days when economic system was simple, government printing out more currency than it supposed to was the main cause for the inflation. In today economic government’s credibility, amount of bonds trade, timing of financial contract’s expiration and many other financial factors can be the causes of the inflations.
Farmers vs. Wall Street
According to Bureau of Labor Statistics, the sum of farmers, ranchers, and agricultural managers make up less than two percent of American population. On the other hand, number of people in business and financial operations occupations increase by twenty-percent every year in America. [5] This means there are more people who are making their earnings through playing the numbers than people actually producing goods. Healthy economy and country requires good balance of agriculture, manufacturing, and service industry.
Government Budget
An economist from Blind Spot argue that in order to US government keep its economic strength, the government spends more money on military and finance. To show other countries that US is the most secure place in world to invest and deposit money, the government maintain highly expensive military and support out-of-control finance system. A small portion of this budget can make significant improvement on people’s life.
The Solution
At Personal and Local Level
Minimize the currency use
Alex James, who is providing quality public service, argues that living without money is self-sustainability.[6] By minimizing the use of money, one can control his or her consumption and careful about his or her spending. One will only buy what he or she needs and minimize the purchase of what he or she wants.
Support Local Currency
Many communities are adopting idea of exchange hours and build currency based on terms of hours. The HOUR Exchange, the organization in Corvallis, OR, is a membership organization dedicated to promote local commerce, fair wages, environmental responsibility, regional self-sufficiency, and neighborliness. Supporting and using the community currency can help keep local businesses thriving, support entrepreneurs, and network within the community to find local goods. [7]
Exchange Your Skills for Goods or Services
Just like how people in the beginning did, people in community can gather to exchange skills for goods or services. By providing number of hours of service with one’s skill set, one can receive same number hours of service or equivalent amount of goods from others. Many communities are promoting a non-profit organization providing services and goods to promote sustainable community.
Be a Member of Troy Shares
Troy Shares is a non-profit organization of people who are willing to share their skills and looking for helps from others. The members meet monthly to introduce them to new members and share their skills and contract information. By simply posting three needs and three services the member can offer on the Google document, members can contact each other to exchange their services.
At Institutional Level
We should have an alternative monetary currency for environmental value. ECO Currency project suggests that once we have a currency backed by environmental value, people will be more engaged in environmental issues and value environment more. Once the economic ecology, which is defined by our financial system of market, money, goods and other economic exchange, become base of our economic system, currency will be worth of something that matters. [8] This project is not just a theoretic proposal but could be the ultimate solution for the currency problem that is based on government’s credit and little inherent value.
Bibliography
1. Wikipedia contributors. "Nixon Shock." Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, 2 Sept. 2011. Web. 14 Sept. 2011. http://en.wikipedia.org/wiki/Nixon_Shock
2. “Currency”. The Motley Fool. Fool.com. Web. 14 Sept. 2011. http://wiki.fool.com/Currency
3. Ritchie, Joshua. “The Financial Burden of the Penny”. Mint Life: Know your money: Live your life. 21 Jun. 2010. Web. 14 Sept. 2011. http://www.mint.com/blog/trends/penny-cost-to-make-06212010/
4. Kurtzman, Joel. The Death of Money: How the Electronic Economy Has Destablized the World's Markets and Created Financial Chaos. Little Brown & Co. 1994.
5. U.S. Bureau of Labor Statistics. The Occupational Outlook Handbook. 2010-11 Edition.
6. James, Alex. State of Affairs. “Living Without Money: Self-Sustainability in Britain”. Blog entry on November 9, 2009. http://state-of-affairs.com/2009/11/09/living-without-money-self-sustainability-in-britain/
7. Hour Exchange. “Making Community Connections with Local Currency”. http://hourexchange.org/
8. Eco Currency. “Balancing economy and environment”. http://www.eco-currency.net/
Most currency in use today is fiat currency: it is worth something because we give the value to it. US currency, US dollar, is Federal Reserve Notes that is controlled by the Federal Reserve Banks. After “Nixon Shock”, the President Richard Nixon unilaterally cancelled the direct convertibility of the US dollar to gold, took place in 1971, the US dollar is backed only by the government credit. [1] Simply, the dollar is backed by the full faith and credit of the US government. [2] This trust-system is a potential problem. The dollar is only worth what we agree that it is worth as a society. A problem is that the society (Reserve Bankers) mostly consists of financial leaders who are highly influenced by corporations and Wall Street. These people often propose and change the worth of the dollar without considering their social responsibilities. In addition, the current currency faces environmental problem. The resources making the penny are zinc and copper. The value of these resources has quadrupled over last decades. The cost of making a penny is nearly two cents. A nickel faces the same problem where it cost about nine cents to produce it. [3] Paper has been an inexpensive material but if we keep printing out dollar bills, the same problem can happen for the banknotes soon or later. Bottom line is that US dollar is a piece of paper that has little inherent value. It is not valuable when our government fails to back it up. You can’t eat it and it can’t be used to build a valuable commercial product.
The Stakeholders
In large, the people and government are affected by the currency system the most. The currency was created to help people. In the beginning, people directly exchange goods or services for other goods and/or services. To make this exchange process easier the civilization started to use a common unit of exchange like currency. Today currency is fiat currency where the value is flexible. This instability is affecting people’s lives and properties significantly. According to Joel Kurtzman, an author of The Death of Money, today currency has become too complex system where stocks, bonds, insurance policies, and financial contracts emerged so that a historic notion of money has faded away. [4] Most people fear this complex system and are often overwhelmed by financial terms and experts. The value of house, bank deposit, insurance, and more personal properties are not stable and subject to change. The government is doing its best job to maintain the value of US dollar and secure people’s property value. However, it requires a lot of effort. In global economy system, the government needs to coordinate both national and international factors to protect the value of US dollar. The government also needs to maintain its credibility. The government has a huge responsibility and its capacity is often challenged.
Consequences of Not Addressing
- Inflation
When people fail to address the currency issues to the government or oversee government’s policies on currency, there are many consequences. The country can face the inflation where the value of the currency decreases. Through an effective civic engagement, people must check and question the government. In old days when economic system was simple, government printing out more currency than it supposed to was the main cause for the inflation. In today economic government’s credibility, amount of bonds trade, timing of financial contract’s expiration and many other financial factors can be the causes of the inflations.- Farmers vs. Wall Street
According to Bureau of Labor Statistics, the sum of farmers, ranchers, and agricultural managers make up less than two percent of American population. On the other hand, number of people in business and financial operations occupations increase by twenty-percent every year in America. [5] This means there are more people who are making their earnings through playing the numbers than people actually producing goods. Healthy economy and country requires good balance of agriculture, manufacturing, and service industry.- Government Budget
An economist from Blind Spot argue that in order to US government keep its economic strength, the government spends more money on military and finance. To show other countries that US is the most secure place in world to invest and deposit money, the government maintain highly expensive military and support out-of-control finance system. A small portion of this budget can make significant improvement on people’s life.The Solution
At Personal and Local Level
- Minimize the currency use
Alex James, who is providing quality public service, argues that living without money is self-sustainability.[6] By minimizing the use of money, one can control his or her consumption and careful about his or her spending. One will only buy what he or she needs and minimize the purchase of what he or she wants.- Support Local Currency
Many communities are adopting idea of exchange hours and build currency based on terms of hours. The HOUR Exchange, the organization in Corvallis, OR, is a membership organization dedicated to promote local commerce, fair wages, environmental responsibility, regional self-sufficiency, and neighborliness. Supporting and using the community currency can help keep local businesses thriving, support entrepreneurs, and network within the community to find local goods. [7]- Exchange Your Skills for Goods or Services
Just like how people in the beginning did, people in community can gather to exchange skills for goods or services. By providing number of hours of service with one’s skill set, one can receive same number hours of service or equivalent amount of goods from others. Many communities are promoting a non-profit organization providing services and goods to promote sustainable community.- Be a Member of Troy Shares
Troy Shares is a non-profit organization of people who are willing to share their skills and looking for helps from others. The members meet monthly to introduce them to new members and share their skills and contract information. By simply posting three needs and three services the member can offer on the Google document, members can contact each other to exchange their services.At Institutional Level
We should have an alternative monetary currency for environmental value. ECO Currency project suggests that once we have a currency backed by environmental value, people will be more engaged in environmental issues and value environment more. Once the economic ecology, which is defined by our financial system of market, money, goods and other economic exchange, become base of our economic system, currency will be worth of something that matters. [8] This project is not just a theoretic proposal but could be the ultimate solution for the currency problem that is based on government’s credit and little inherent value.
Bibliography
1. Wikipedia contributors. "Nixon Shock." Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, 2 Sept. 2011. Web. 14 Sept. 2011. http://en.wikipedia.org/wiki/Nixon_Shock
2. “Currency”. The Motley Fool. Fool.com. Web. 14 Sept. 2011. http://wiki.fool.com/Currency
3. Ritchie, Joshua. “The Financial Burden of the Penny”. Mint Life: Know your money: Live your life. 21 Jun. 2010. Web. 14 Sept. 2011. http://www.mint.com/blog/trends/penny-cost-to-make-06212010/
4. Kurtzman, Joel. The Death of Money: How the Electronic Economy Has Destablized the World's Markets and Created Financial Chaos. Little Brown & Co. 1994.
5. U.S. Bureau of Labor Statistics. The Occupational Outlook Handbook. 2010-11 Edition.
6. James, Alex. State of Affairs. “Living Without Money: Self-Sustainability in Britain”. Blog entry on November 9, 2009. http://state-of-affairs.com/2009/11/09/living-without-money-self-sustainability-in-britain/
7. Hour Exchange. “Making Community Connections with Local Currency”. http://hourexchange.org/
8. Eco Currency. “Balancing economy and environment”. http://www.eco-currency.net/
Image Source
Bartering
http://thecompanyline.files.wordpress.com/2009/12/bartering1.jpg
Graph
http://www.messickreport.com/2011/05/its-not-gold-that-rising-in-value.html
No Money
http://state-of-affairs.com/2009/11/09/living-without-money-self-sustainability-in-britain/no-money/
Eat Money
http://www.flickr.com/photos/your_teacher/1040476355/
Currency
http://banknotesoftheworldss.com/wp-content/uploads/2011/08/World-Currency-Photos.jpg
Eco-currency
http://www.nextnature.net/2010/05/eco-currency-%E2%80%93-a-proposal-to-balance-economical-and-environmental-value/
House Value
http://kcmblog.com/2011/03/11/will-i-get-more-money-if-i-wait/